CDC Plans $1 Billion Nigeria Post-Brexit Investment Drive

(Bloomberg) -- The U.K.’s development finance arm, CDC Group Plc, may invest more than $1 billion in Nigeria over the next four years as the government looks to increase business ties with Africa after it leaves the European Union in March.

CDC, which has investments ranging from listed Nigerian banks to an Ethiopian wine maker and a bakery in Zimbabwe, aims to put as much as $4.5 billion into the continent in that time, which would almost triple its existing African portfolio of roughly $2.6 billion.

“A reasonable figure for Nigeria, given the size of its economy, would be about $1.2 billion,” Nicholas O’Donohoe, CDC’s chief executive officer, said in an interview in Lagos, the nation’s commercial capital.

CDC will also open offices in Lagos and Nairobi, Kenya’s capital, adding to one it has in Johannesburg. The Nigerian office will open early next year and have around 10 people, O’Donohoe said.

The group has been active in Nigeria, where it has $400 million of investments, for 70 years. It injects money into companies directly as equity or debt, or through private-equity funds. This year it loaned $100 million to the Nigerian unit of Indorama Corp., which is building a fertilizer factory in the south of the country. It also committed $25 million to Synergy, a local private-equity firm focused on small businesses in West Africa.

U.K. Prime Minister Theresa May visited South Africa, Nigeria and Kenya earlier this year, saying she wanted the country to become the G7’s biggest investor on the continent by 2022.

Here’s what else O’Donohoe said:

• CDC, which has stakes in Nigerian lenders including Diamond Bank Plc, Guaranty Trust Bank Plc and Zenith Bank Plc, will probably invest more in the banking sector.
  • “If you look at the larger banks, there’s a strong case that they’re through the worst,” he said. “It’s more problematic when you look elsewhere.”
  • READ: Skye’s Crash Casts Doubt Over Health of Small Nigerian Banks
• It’s working with the administrators of Kenya’s ARM Cement Ltd., part-owned by CDC and which has been exploring a sale since last year to help manage its debts.
  • CDC doesn’t know if Nigerian billionaire Aliko Dangote is mulling buying the company.
  • “We’re in the risk-taking business and that one did not work out well,” said O’Donohoe. “But it’s an attractive asset.”
  • READ: Dangote Is Said to Express Interest in Kenyan Cement Firm ARM
• CDC will still look to invest more in Kenya and other East African countries, including Ethiopia, Tenbite Ermias, head of Africa, said in the same interview.
  • “Ethiopia could be a big opportunity,” he said. “It depends on how the economy and politics progress.”
  • READ: Democracy Comes to Ethiopia at Breakneck Speed

To contact the reporter on this story: Paul Wallace in Lagos at pwallace25@bloomberg.net

To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Hilton Shone, Paul Richardson

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